Reebok 2006 Annual Report Download - page 85

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adidas Group ›081
Net Income From Continuing Operations Grows 14%
The Group’s net income from continuing operations increased
14% to € 496 million in 2006 from € 434 million in 2005. The
Group’s strong sales increase was the main driver of this
improvement. In addition, net income was positively impacted
by the lower tax rate, which declined 2.3 percentage points to
31.4% in 2006 (2005: 33.7%), mainly due to a more favorable
earnings mix throughout the Group as well as a one-time tax
benefit in the fourth quarter of 2006 (see Note 28, p. 174).
No Income/Loss From Discontinued Operations
In 2006, no income or loss from discontinued operations was
incurred. This compares to a loss from discontinued opera-
tions in the amount of € 44 million in 2005 related to the
Salomon business segment, which was divested in October
2005.
Minority Interests Increase by 74%
The Group’s minority interests increased 74% to € 13 million in
2006 from € 7 million in the prior year. This increase primarily
reflects higher minority interests related to the adidas joint
venture in Korea in the first eight months of the year before
the adidas Group assumed full ownership of the subsidiary on
September 1, 2006. In addition, the first-time consolidation of
the Reebok business impacted this development.
Net Income Attributable to Shareholders Increases 26%
The Group’s net income attributable to shareholders increased
26% to € 483 million in 2006 from € 383 million in the prior
year. This improvement reflects the outstanding performance
of the adidas and TaylorMade-adidas Golf segments as well
as the non-recurrence of losses from discontinued opera-
tions related to the Salomon business in 2005.
Basic and Diluted Earnings Per Share Up 16% and 17%
On June 6, 2006, adidas AG conducted a share split in a ratio
of 1:4, with each existing adidas AG share being divided into
four shares (see Our Share, p. 34). All numbers of shares
have been restated. The Group’s basic earnings per share
from continuing and discontinued operations increased 16%
to € 2.37 in 2006 versus € 2.05 in 2005 despite the capital
increase conducted on November 3, 2005. The Group’s total
number of shares outstanding increased by 489,840 shares in
2006 to 203,536,860 as a result of shares from stock options
exercised as part of Tranches II, III and IV of the Management
Share Option Plan (MSOP) of adidas AG, as well as the con-
version of one tranche of the convertible bond (see Note 22,
p. 165). Consequently, the average number of shares used in
the calculation of basic earnings per share was 203,386,104
(2005 average: 186,947,832). Diluted earnings per share from
continuing and discontinued operations in 2006 increased
17% to € 2.25 from € 1.93 in the prior year. The dilutive effect
mainly results from approximately 16 million potential addi-
tional shares that could be created in relation to our outstand-
ing convertible bond, for which conversion criteria were met
for the first time at the end of 2004.
Net Income Attributable to Shareholders by Quarter
€ in millions
Q1 20051)
Q1 20062)
Q2 20051)
Q2 20063)
Q3 20051)
Q3 20063)
Q4 20051)
Q4 20064)
105)
144)
66)
82)
215)
244)
(4)
13)
1) Figures reflect continuing operations as a result of the divestiture of the Salomon
business segment.
2) Including Reebok business segment from February 1, 2006 onwards.
3) Including Reebok business segment.
4) Including Reebok business segment, excluding Greg Norman wholesale business
from December 1, 2006 onwards.
Net Income Attributable to Shareholders € in millions
2002
2003
2004
2005
20061)
229
260
314
383
483
1) Including Reebok business segment from February 1, 2006 onwards, excluding
Greg Norman wholesale business from December 1, 2006 onwards.
» Income Statement